ACA Accounting and Assurance Exam Questions With Verified Answers

ACA Accounting and Assurance Exam Questions With Verified Answers Reasonable Assurance engagement 1. Evidence Sought 2. Opinion Given 3. Example - answer1. Sufficient and Appropriate 2. Positive Opinion 3. The financial statements show a true and fair view in all material respects Limited Assurance engagement 1. Evidence Sought 2. Opinion Given 3. Example - answer1. Sufficient and appropriate (less intrusive) 2. negative conclusion 3. Nothing has come to our attention that makes us believe that the subject matter is misstated Stakeholders - Benefits of audit and assurance - answer- enhances credibility of information being reported - reliable information to hold management to account - draws attention of user to any deficiencies Directors - Benefits of audit and assurance - answer- reduces management bias - deter fraud - enhances reliability of information being reported on - management letter contains constructive advice on internal controls Customers and Suppliers - Benefits of audit and assurance - answer- helps determine whether they should trade with the company lenders / banks - Benefits of audit and assurance - answer- business is scrutinised by another set of eyes - gives added confidence to lenders, making it easier for companies to raise finance Employees - Benefits of audit and assurance - answer- confidence over job security - confidence over bonuses payable if linked to profits Society - Benefits of audit and assurance - answer- ensures high quality, reliable information, circulates in the market - helps to improve company's reputation - additional assurance to 3rd parties such as tax authorities The audit threshold - answer- no more than 50 employees - company turnover does not exceed £10.2m - company gross assets do not exceed £5.1 m Audit has to be carried out for a small company if - answer- articles of association require one - shareholders who own 10% or more ask for one - company is a public company - company is involved with insurance or banking Nature of work - Audit Engagement 1. ISA 2. Example 3. procedures performed 4. type of assurance issued 5. opinion / conclusion - answer1. ISA 500 (UK)